Kane Constructions Pty Ltd T/A Kane Constructions (NSW) Pty Ltd

[2015] FWC 8327

[2015] FWC 8327

FAIR WORK COMMISSION

DECISION

Fair Work Act 2009
s.185 - Application for approval of a single-enterprise agreement

Kane Constructions Pty Ltd T/A Kane Constructions (NSW) Pty Ltd
(AG2015/5938)

COMMISSIONER ROE MELBOURNE, 1 DECEMBER 2015

Application for approval of the Kane Constructions Pty Ltd Enterprise Agreement 2015-2019 - Application refused.

[1] An application has been made for approval of an enterprise agreement known as the Kane Constructions Pty Ltd Enterprise Agreement 2015-2019 (the Agreement). The application was made pursuant to Section 185 of the Fair Work Act 2009 (the Act). It has been made by Kane Constructions Pty Ltd T/A Kane Constructions (NSW) Pty Ltd (the employer). The Agreement is a single enterprise agreement.

[2] For the reasons outlined in correspondence to the parties I am satisfied that the concerns raised by the Fair Work Commission (the Commission) and the Construction, Forestry, Mining and Energy Union (CFMEU) concerning the BOOT are met by the provision of the undertakings offered by the company and also by the adoption of the model flexibility term.

[3] Two other matters were raised by the CFMEU. Firstly, the issue of the Fair and Lawful Building Sites Code 2014 (the Code) which is referred to in a number of places in the Agreement; and secondly, the issue of the scope of the Agreement.

[4] The CFMEU were permitted to make submissions and participate in the hearing on the grounds that they have members employed by the employer. I am also satisfied that there are public interest considerations similar to those which applied in CEPU v Main People Pty Ltd. 1 I have carefully considered the written submissions provided by the parties and also the submissions made at the hearing of this matter.

Building Code 2014

[5] The CFMEU argues that the references to the Code in the Agreement are inconsistent with the decision in Viridian. 2

[6] I accept that the Viridian decision is authority for the proposition that provisions which create uncertainty as to what are the operative terms of the Agreement can in some circumstances mean that:

● The Agreement is able to be varied in a manner inconsistent with the requirements in the Act for variation to an agreement.
● It is not possible to determine that an agreement passes the BOOT because of the uncertainty as to what the operative provisions of the agreement are.
● There is a question as to whether there could have been a genuine agreement.

[7] There appear to be three operative clauses which deal with the Code:

● In relation to Clause 3.6.3, any variation to achieve consistency with the Code must be pursuant to the Act and therefore must meet all the relevant votes and tests at that time. The Commissioner notes that there is no uncertainty about the agreement.
● In relation to Clause 5.5 dealing with site specific payments, there is no requirement under the Act for site specific payments. The Code means that there is uncertainty as to when those payments might be made but the clause does not provide any enforceable entitlement to any site specific payment and therefore the reference to the Code does not make the agreement uncertain or unable to be assessed for the purposes of the ‘Better Off Overall Test’. The Commissioner notes that the Code does not vary the agreement.
● In relation to Clause 17.8 this provision does not permit a decision which is inconsistent with the other provisions of the Agreement (Section 739 of the Fair Work Act 2009) and only limits the scope of what can be determined by the Commission by arbitration. The code does not vary the Agreement. The document is a known document and not one which can be amended from time to time. This is not contrary to the requirements for a disputes settlement procedure and it is not a situation which is comparable to the Viridian decision.

[8] I am not satisfied that the references to the Code render the Agreement uncertain or vary the Agreement in a manner inconsistent with the variation provisions in the Act or as permitted by individual flexibility agreement.

[9] The employer confirmed in response to correspondence from the Fair Work Commission that:

“The employees were not provided with a copy of the proposed 2014 Building Code. However the proposed Building Code is accessible on the Federal Governments website. The employees are aware of the current 2013 Building Code and understand were this can be accessed.”

[10] The MBA on behalf of the company submitted that employees now have a copy of the Code and would give evidence that the issue of the Code would not have changed their vote. I am not satisfied that this is relevant to the issue of whether or not the obligation under Section 180(2) was met at the time of bargaining.

[11] I agree with the submissions of the CFMEU that Section 180(2) obliges employers to take positive action – ‘all reasonable steps’ – to ensure that employees are either given, or have access to, the text of the proposed agreement and any other material incorporated by reference in the agreement. The employer does not suggest that they took any steps to ensure that the employees had access to the Code.

[12] There are two versions of the 2014 Code. The initial version was released on 17 April 2014. An amended version was announced on 28 November 2014. Both are available on the internet. The proposed agreement does not make clear which version is to be incorporated.

[13] Moreover, in circumstances where there exists another Code, being the Building Code2013, which has legal effect under Section 27 of the Fair Work (Building Industry) Act 2012 (Cth) and which deals with the same subject matter as the proposed 2014 Code, it is not clear that the employees would readily understand what document is incorporated.

[14] The 2014 Code is not legislation and it therefore has a different status to the ‘ordinary laws of the land’ which were referred to by the Full Bench in McDonald’s Australia Pty Ltd. 3

[15] The concern about the failure to meet Section 180(2) of the Act could be overcome by the provision of an undertaking to remove the references to the Code from the Agreement. In the absence of such an undertaking I cannot be satisfied that the mandatory requirements of Section 180(2)(a)(ii) have been met.

The scope of the Agreement

[16] The Agreement was voted on by 3 employees. Those employees are in NSW and ACT. The CFMEU was not a bargaining representative for the three employees. The employer says that these were the only employees who are engaged in NSW and ACT and it was only ever intended that the Agreement cover those employees. The intention to only cover employees in NSW and ACT is reflected in the F17 Form where at question 4.2 it is stated that the Agreement is intended to operate in ACT and NSW. However, the scope of the Agreement is expressed in Clause 3.3 as: “This Agreement shall apply where the Company undertakes construction work, including maintenance work.” There is no geographical limitation on the coverage of the Agreement. It covers Kane Constructions Pty Ltd. Kane employs persons outside NSW and ACT. The CFMEU has as members employees of Kane Constructions Pty Ltd.

[17] My view of this is reinforced by the fact that the existing agreement which will be replaced by the Agreement defines the employees covered by that agreement as confined to NSW and ACT (Clause 3.4 of the Kane Constructions Pty Ltd Enterprise Agreement 2011 -2015) whilst the Agreement defines employee as a person who “performs work in any State or Territory in Australia” (Clause 2.12 of the Agreement). I am satisfied that the Agreement operates outside of ACT and NSW. Kane Constructions Pty Ltd confirmed that it does have employees outside of ACT and NSW and the CFMEU confirmed that it does have members employed by Kane Constructions Pty Ltd outside of NSW and ACT. These submissions were not contested and I accept them.

[18] Given that it was submitted that the Agreement was only intended to cover employees in NSW and ACT I provided the company with the opportunity to provide an undertaking to restrict the scope. This was subject to considering any submissions which might be made by the CFMEU. After considering the submissions of the CFMEU I am satisfied that I cannot accept the proposed undertaking to alter the scope of the Agreement.

[19] The undertaking as to the coverage of the proposed agreement will result in substantial changes to the agreement within the meaning of Section 190(3)(b). Whether one or more undertakings represent a substantial change to an agreement is a question of fact and degree.

[20] The particular circumstance of undertakings as to coverage was considered recently by a Full Bench of the Commission in CEPU v Main People Pty Ltd. 4 The Full Bench said relevantly:

“… It may be accepted that an undertaking which clarifies an ambiguous provision of an agreement for which approval is sought in accordance with the intention of the parties will not be likely to cause a significant change in that agreement. However, this was not a case of ambiguity. The breadth of the classifications in the Agreement, and the geographical scope of its coverage, made it apparent that it had application beyond work covered by the Metals Award. The first Full Bench made a clear finding to that effect in the Appeal Decision with which we agree.

The scope of coverage of an enterprise agreement is one of its fundamental features. The coverage provision of an agreement serves to identify the class of persons who will be entitled to its benefits while it is in operation. The importance of an agreement’s coverage is signified by the fact that, under the FW Act, s.186(3) requires the group of employees covered by the agreement to be fairly chosen. For that reason an undertaking which purports to alter the coverage of an enterprise agreement by excluding classes of persons who, on the face of the agreement, would be covered by it, will always be likely to be a significant change.

Further, it was with respect an incorrect approach to attempt to discern the parties’ common intention concerning the coverage of the Agreement from the statutory declarations supporting the application for approval of the Agreement rather than from the text of the Agreement itself. As was stated by the Full Bench in Australasian Meat Industry Employees Union v Golden Cockerel Pty Limited 9:

“Where the common intention of the parties is sought to be identified, regard is not to be had to the subjective intentions or expectations of the parties. A common intention is identified objectively, that is by reference to that which a reasonable person would understand by the language the parties have used to express their agreement.”

The Agreement disclosed in plain terms an intention for it to apply well beyond work covered by the Metals Award. In those circumstances, there was no basis for a different intention to be discerned from the statutory declarations supporting the application.” 5

[21] The Full Bench comments about the mutual intention of the parties are apt to the circumstances of this Agreement. The Agreement on its plain terms covers employees throughout Australia. There is no document provided to employees to explain the Agreement which suggests any ambiguity or uncertainty on this point. The employer in completing the F17 Statutory Declaration confirmed that all employees of the employer other than senior executives were covered by it. The indication on the F17 that it only involves employees in the ACT and NSW is evidence of the subjective intention of the employer after the Agreement was made and it is not relevant to the interpretation of the Agreement. There is no document, such as the information summarising the Agreement provided to employees or the Notice of Representational Rights, which raises anything which would suggest anything other than the plain words of the Agreement.

[22] I cannot accept an undertaking to change the scope of the Agreement in this case. If the scope of the Agreement is not changed then there cannot have been genuine agreement (Section 188 of the Act). Not all employees who would be covered by the Agreement were provided with the opportunity to vote. The pre-approval steps were not followed in respect to all employees (Section 180(2), (3) and (5)). The CFMEU as a bargaining representative was denied the opportunity to participate in bargaining. Given that only three employees were provided with the opportunity to vote the exclusion of only one employee from the voting and the bargaining process could have made a difference. That one employee might, if they had the opportunity, have influenced the views of other employees. The access period is a period when employees should have the opportunity to influence the outcome. The Agreement was not made in that the employees were not all asked to approve the agreement (Section 182(1) and Section 181(1)).

[23] The Agreement cannot be approved. The Application is dismissed.

COMMISSIONER

Appearances:

Mr R Grace and Mr C Powell appeared for the Applicant.

Mr T Roberts appeared for the CFMEU.

Hearing details:

2015

Melbourne with video to Sydney

December 1

 1   [2015] FWCFB 4467.

 2   CFMEU v CSR Limited T/A Viridian New World Glass[2015] FWCFB 3889.

 3   [2010] FWAFB 4602.

 4   [2015] FWCFB 4467.

 5   [2015] FWCFB 4467 at [34]-[37].

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